STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HOPE OF SOUTHWEST FLORIDA, INC.,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent,
and
HOSPICE OF NAPLES, INC.,
Intervenor.
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) Case No. 03-4067CON
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RECOMMENDED ORDER
Pursuant to notice, a final hearing was held in this case on August 18-20, 23-27, 30-31, and September 1-3, 8-9, 2004, in Tallahassee, Florida, before T. Kent Wetherell, II, the designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: J. Robert Griffin, Esquire
J. Robert Griffin, P.A.
1342 Timberlane Road, Suite 102-A Tallahassee, Florida 32312-1762
For Respondent: Kenneth W. Gieseking, Esquire
Agency for Health Care Administration Fort Knox Building III,
Mail Station 3
2727 Mahan Drive
Tallahassee, Florida 32308
For Intervenor: Robert D. Newell, Jr., Esquire
Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
STATEMENT OF THE ISSUE
The issue is whether Petitioner’s application for a Certificate of Need to establish a new hospice program in Hospice Service Area 8B should be approved.
PRELIMINARY STATEMENT
After the Agency for Health Care Administration (Agency) published a fixed need pool (FNP) identifying a need for zero new hospice programs in Hospice Service Area (SA) 8B for the April 2003 batching cycle, Petitioner Hope of Southwest Florida, Inc. (Hope), timely advised the Agency of alleged errors in the FNP calculations. After the Agency advised Hope that it did not intend to make any changes in the FNP calculations, Hope timely petitioned for an administrative hearing on that decision.
Hope’s petition was referred to the Division of Administrative Hearings (Division) on May 29, 2003, where it was assigned DOAH Case No. 03-2014.
Hope filed an application for a Certificate of Need (CON) to establish a new hospice program in SA 8B in the April 2003
batching cycle. The Agency comparatively reviewed Hope’s application with the CON application filed by Heartland Hospice Services of Florida, Inc. (Heartland), which also sought to establish a new hospice program in SA 8B. The Agency published notice of its intent to deny both applications in the September 12, 2003, volume of the Florida Administrative Weekly.
Thereafter, Heartland and Hope timely filed petitions for administrative hearing challenging the Agency’s preliminary denial of their respective applications. The petitions were referred to the Division on November 3, 2003, where they were assigned DOAH Case Nos. 03-4065CON (Heartland) and 03-4067CON (Hope).
DOAH Case Nos. 03-4065CON and 03-4067CON were consolidated by Order dated November 17, 2003, and DOAH Case No. 03-2014 was consolidated with those cases by Order dated December 19, 2003. By Orders dated December 2, 2003, and January 7, 2004, Hospice of Naples, Inc. (HON), was granted leave to intervene in each of the consolidated cases “subject to proof of standing at hearing.”
On May 11, 2004, Heartland voluntarily dismissed its petition. By Order dated May 18, 2004, DOAH Case No. 03-4065CON was severed from the consolidated cases, and the Division’s file in that case was closed.
The final hearing in the remaining cases was originally scheduled to begin on June 28, 2004, but it was subsequently continued to August 18, 2004, upon HON’s motion. The final hearing commenced on that date and was conducted over a period of 15 days, concluding on September 9, 2004.
At the conclusion of the presentation of its case-in-chief, Hope voluntarily dismissed its challenge to the FNP calculations for SA 8B. Thereafter, by Order dated August 30, 2004, the Division’s file in DOAH Case No. 03-2014 was closed.
At the hearing, Hope presented the testimony of 24 witnesses: Samira Beckwith, who was accepted as an expert in hospice administration and hospice social work; Gwen Feather, who was accepted as an expert in hospice clinical care and hospice nursing; Kent Anderson, who was accepted as an expert in hospice administration; Julie Shera, who was accepted as an expert in hospice community development; Pamala Grottanelli, who was accepted as an expert in hospice nursing and hospice inpatient facility management; Theresa Dudek, who was accepted as an expert in human resource management; Lisa Peterson; Peter Benjamin, who was accepted as an expert in sales and marketing; Dr. Calvin Knowlton, who was accepted as an expert in clinical pharmacy; Jill Lampley, who was accepted as an expert in hospice financial management; James Nathan, who was accepted as an expert in hospital administration; Fred Thomas, who was accepted
as an expert in public housing administration; Dr. Thomas Teufel, who was accepted as an expert in medical oncology; Darrell Weiner, who was accepted as an expert in health care finance and financial feasibility; Dr. Bruce Lipschutz, who was accepted as an expert in internal medicine and hospice and palliative care; Dr. Doug Heldreth, who was accepted as an expert in medical oncology; Jay Cushman, who was accepted as an expert in health planning; Julie Pitts, who was accepted as an expert in oncology nursing; Dr. Brian Walker, who was accepted as an expert in medical oncology; John Mahoney, who was accepted as an expert in hospice management and regulatory compliance; Jeanne Siversen; Dr. Mary Stegman, who was accepted as an expert in hospice medical direction and palliative medicine; Pat LaBeau; and Dr. Diane Smith, who was accepted as an expert in hospice medical director administration and hospice and palliative care medicine.
Hope also presented the deposition testimony of 24 witnesses: Dr. David Axline, Denise Blanton, Allison Brown, William Enslen, Dr. Charles Eytel, Gary Holloway, Miriam Hallenbeck, Richard Heers, Dr. Micheal Katin, Cheryl Logsdon, Melanie Looper, Vincent Martino, Debbie McRea, Juan Medina, Dr. Daniel Morris, Dr. Mark Moskowitz, Maria Plaskin, Dr. James Rubenstein, Laurie Seuff, Heidi Tworek, Alice Waggoner, Dr.
Stephen West, Steven Wheeler, and Phyllis Russo. The
depositions were received as Exhibits P19.1 through P19.24, respectively.
Hope’s Exhibits P1 through P13, P14-A through P14-E, P16 through P18, P19.1 through P19.24, P20 through P25, P27, and P29 through P33 were received into evidence. Exhibits P15, P26, and P28 were offered but not received.
HON presented testimony of 14 witnesses: Patricia Moore, who was accepted as an expert in nursing and hospice operations and administration; Diane Cox, who was accepted as an expert in hospice administration; Dr. Diedra Woods, who was accepted as an expert medical doctor, medical director, and in the area of hospice and palliative medicine; Dr. Douglas Nee, who was accepted as an expert in pharmacy; Karen Rollins, who was accepted as an expert in nursing and hospice operations; Mary Broedeur, who was accepted as an expert in nursing and hospice and palliative care nursing; Ann Balcom; Jacqueline Perrine, who was accepted as an expert in hospice nursing; Joanne Folan; Christine D’Angelo, who was accepted as an expert in nursing; Mary Shaughnessy; Katharen Chamberlain; Robert Beiseigel, who was accepted as an expert in financial analysis and forensic financial analysis; and Lynne Mulder, who was accepted as an expert in health care planning.
HON also presented the deposition testimony of 17 witnesses: Dr. Diane Smith, Ronald Burris, Carol Walter, Sylvia
Puente, Terri Aviles, Edward Laudise, Joseph Brister, Kathleen Hill, Celevia Evans, Lillian Cuevas, Dr. Susan McMahan, Deborah Chandler, Dr. Perry Gotsis, Chuck Pollard, John Helsel, Mary George, and Anthony Chioccarelli. The depositions were received as Exhibits HON-114, HON-111, HON-45, HON-53 through HON-65, and HON-112, respectively.
HON’s Exhibits HON-1 through HON-17, HON-19 through HON-39, HON-42 through HON-97, HON-99 through HON-102, HON-105 through HON-107, HON-111 through HON-114, and HON-121 were received into evidence. Exhibits HON-122 and HON-123 were offered but not received.
The Agency presented the testimony of Jeffrey Gregg, who was accepted as an expert in health care planning. The Agency’s Exhibits A-1 and A-2 were received into evidence.
Official recognition was taken of 42 Code of Federal Regulations (CFR) Sections 418.3, 418.50 through 418.74, 418.80 through 418.88, and 418.90 through 418.100; and the notices of deposition filed by HON in this case on April 12, June 7, June 10, July 16, and July 21, 2004.
The 17-volume Transcript of the final hearing was filed on October 25, 2004. The parties initially requested and were given 45 days from that date to file their proposed recommended orders (PROs), but the deadline was subsequently extended to December 17, 2004, at the parties’ request. Hope and HON timely
filed their PROs on that date; the Agency did not file a PRO. The parties' PROs have been given due consideration in the preparation of this Recommended Order.
FINDINGS OF FACT
Parties (1) Hope
Hope is a not-for-profit corporation.
Hope has operated a hospice program in SA 8C -- Lee, Glades, and Hendry Counties –- since 1981. Hope is the sole provider of hospice services in SA 8C.
Hope’s SA 8C hospice program is one of the largest hospices in Florida; in 2003, it had more than 3,200 admissions.
Hope is licensed by the Agency and it is a Medicare- certified provider.
Hope was accredited by the Community Health Accreditation Program (CHAP) in December 2003. CHAP is a nationally-recognized accrediting body for hospices.
Hope’s main office is in Ft. Myers, which is in central Lee County. Hope also has offices in Lehigh Acres, which is in eastern Lee County, and a counseling center in Boca Grande, which is in northwest Lee County.
Hope currently has approximately 50 inpatient hospice beds where it provides inpatient and respite care. Those beds
are located in “hospice houses” in Ft. Myers and Cape Coral, which are both in Lee County.
Hope has Agency approval for an additional 24 inpatient hospice beds. Those beds will be located in a “hospice house” that is currently under construction in Bonita Springs, which is also in Lee County.
In addition to its Lee County offices and inpatient facilities, Hope has offices in Clewiston and Buckhead Ridge. Clewiston is in Hendry County, and Buckhead Ridge is in Glades County.
Hope’s Clewiston office opened in 1996, and its Buckhead Ridge office opened in 2001. Prior to opening those offices, Hope served Glades and Hendry Counties from its Lehigh Acres office, which opened in 1993.
Hope divides its patients amongst four care teams, each of which serves patients in a specific geographic region of SA 8C. One team serves patients in and around Lehigh Acres, Clewiston, and Buckhead Ridge; one serves patients in Cape Coral and Pine Island; one serves patients in Ft. Myers and North Fort Myers; and one serves patients in South Fort Myers and Bonita Springs.
Each of Hope’s care teams includes multiple nurses, social workers, home health aides, chaplains, therapists, volunteers, and other professionals involved in the hospice care
provided to Hope’s patients. The staffing of the care teams is sufficient to deliver high quality hospice care to the group of patients being served by each care team.
Hope does not have a separate clinical admissions team; an “admission specialist,” whose function is more clerical than clinical, typically is the first Hope employee to visit the patient after he or she is referred to Hope. The admission specialist begins processing the patient's admissions paperwork; the initial clinical assessment of the patient and the completion of the admissions process occurs later that day, or sometimes the following day, when the patient is evaluated by a nurse and a social worker.
The nurse and social worker that do the initial clinical evaluation of the patient are typically the same individuals that will be caring for the patient after he or she is admitted to Hope. The primary purpose of having the nurse and social worker that will be caring for the patient do the initial evaluation is to enhance continuity of care.
Hope adheres to the “open access” philosophy, which is embodied in the “Hospice Service Guidelines” published by the National Hospice and Palliative Care Organization (NHPCO).
NHPCO is the national trade association of hospices.
The Guidelines are different from the “Standards of Practice for Hospice Programs,” which is also published by
NHPCO. The Standards of Practice document was not introduced into evidence in this proceeding.
The “open access” philosophy embodied in the Guidelines is not yet the standard of practice in the hospice industry; it is an “expectation” or benchmark that industry is moving towards.
The goal of “open access” is to remove or minimize all barriers to accessing hospice care, including barriers associated with the availability of palliative chemotherapy and palliative radiation treatment.
Proactive education and outreach activities to the community and to physicians and other referral sources is also part of the “open access” philosophy. As stated in Hope’s PRO and as more fully discussed below, Hope has adopted a “sales and marketing model” that it uses to “outreach to physicians and other referring entities, in order to enhance referrals and access to care.”
Hope has recently won several national awards, including the 2003 Circle of Life Citation of Honor from the American Hospital Association and NHPCO for its “open access” policies, and the 2003 Pinnacle Award from the American Pharmacists Association Foundation for its pain and symptom management protocols.
Hope is a financially-sound organization. Its audited financial statements from September 30, 2002, reflect that it had unrestricted net assets of $19.6 million, including $7.8 million in cash and $5.5 million in other current assets.
Hope is a profitable organization. It had operating income of $4.65 million and $3.45 million during its fiscal years ending September 30, 2001 and 2002, respectively.
Hope is a successful fundraising organization. Its financial statements reported contributions of approximately
$2.9 million and $2.4 million for the fiscal years ending September 30, 2001 and 2002, respectively.
Hope regularly distributes newsletters about its hospice program to the community and to physicians. Its community newsletter is published quarterly and is sent to approximately 30,000 persons; its physician newsletter is published bi-monthly and is sent to approximately 1,500 physicians and their staff.
Hope’s employees regularly hold workshops and make presentations to community organizations, nursing homes, churches and other entities about the hospice services provided by Hope and the general benefits of hospice.
Those community education and outreach efforts are only a small part of the “community development” activities that Hope uses to attract patients. Indeed, as discussed in Part
F(2)(c) below, the primary focus of Hope's community and professional relations staff is to build and maintain relationships with physicians (primarily oncologists) and health care facilities that refer patients to Hope.
Hope provides access to all hospice-eligible patients who request hospice services without regard to the patient’s ability to pay or payer status.
(2) HON
HON is a not-for-profit corporation.
HON has operated a hospice program in SA 8B -– Collier County –- since 1983. HON is the sole provider of hospice services in SA 8B.
HON is licensed by the Agency and it is a Medicare- certified provider.
HON was certified by the Joint Commission on Accreditation of Health Care Organizations (JCAHO) in August 2001, and it was recently re-certified. JCAHO is a nationally- recognized accrediting body for hospices and other types of health care facilities.
HON has five physical locations in Collier County.
Four of the locations are west of Interstate 75 in or around Naples; the fifth location is in Immokalee, which is a rural community approximately 40 miles east of Naples.
HON has approximately 30 inpatient hospice beds where it provides inpatient and respite care. Sixteen of the beds are in a “hospice house” that is co-located with HON’s main office in central Naples, and the remainder of the beds are located in space that HON leases from a nursing home in northern Naples. The beds at the nursing home opened in March 2003, and the “hospice house” opened in October 2003.
Prior to opening those inpatient units, HON provided inpatient and respite care to its patients at Naples Community Hospital (NCH) pursuant to a contract. The NCH beds are still available to HON, as needed.
HON had approximately 1,300 admissions in 2003, and at the time of the hearing, its average daily census (ADC) was approximately 245 patients.
HON’s admissions and ADC have steadily grown since its inception, and absent a material change of circumstances (such as the approval of Hope’s CON application), the growth trend at HON is expected to continue as a result of the projected population growth in SA 8B and HON’s increasing penetration rate.
HON provides hospice care to its patients through three care teams, which are based out of offices in and around Naples.
The north care team serves patients in the northern portion of Collier County, including the Immokalee area. The south care team serves patients in the southern portion of the county. The central care team serves “specialty” patients throughout the county, which include patients residing in long- term care facilities and patients whose primary language is not English.
Each care team includes one physician, a nurse manager, six-to-eight nurses, two-to-three social workers, a chaplain, three home health aides, a bereavement counselor, a volunteer coordinator, and a clerical support person. The staffing of the care teams is sufficient to deliver high quality hospice care to the group of patients being served by each care team.
The only staff person based out of HON's Immokalee office is a social worker, but the members of the north care team who serve patients in the Immokalee area use the office for charting and other purposes.
In addition to the care teams described above, HON has separate admissions teams consisting of nurses and social workers that are responsible for conducting the initial patient assessment and completing the admissions paperwork once a patient is referred to HON. HON’s admissions teams conduct admissions 24 hours a day, seven days a week.
The admissions team nurses and social workers that conduct the initial patient assessment are not the same nurses and social workers that will be caring for the patient once he or she is admitted to HON. After admission, the patient will be assigned to one of the three care teams –- northern, central, or southern -– identified above.
HON is a fiscally-sound organization. As of December 31, 2003, it had net assets of approximately $16.1 million, and no long-term debt.
HON is a profitable organization. In 2003, HON had total revenues of approximately $15.5 million and net income of approximately $3.3 million.
HON is a successful fundraising organization. It raised all of the funds necessary to construct its main office in 1992, and between August 2001 and December 2003, it was able to raise $10 million to improve its main office, expand its services, and construct its “hospice house.”
HON holds a number of well-established fund-raising events in Collier County each year, which raise between $350,000 and $400,000 in donations annually. Those donations account for approximately one-third of HON’s annual donations.
HON’s success in its fund-raising efforts is a reflection of the community’s support for, and its perception of HON, both historically and on an on-going basis.
HON has approximately 230 employees, including full- time, part-time, and per diem staff.
HON currently employs a full-time medical director, and five other physicians on a full-time or part-time basis. Prior to April 2003, however, the medical director was the only physician employed by HON.
HON operates an extensive community education program about the hospice services that it provides. The program includes newsletters and regular participation in and presentations to a variety of community groups by HON employees. HON does not specifically focus on increasing referrals through sales and marketing efforts directed to oncologists or other physicians.
HON provides a number of free services to the residents of Collier County in addition to the services that it provides to its hospice patients that are not reimbursed by Medicare. For example, HON provides a psychologist who conducts grief workshops for children in the community who have lost loved ones through death, and it provides counselors and other assistance to the Alzheimer’s Support Network in Naples to help the Network develop and implement programs for managing grief in Alzheimer’s families.
HON provides access to all hospice-eligible patients who request hospice services without regard to the patient’s ability to pay or payer status.
(3) Agency
The Agency is the state agency that administers the CON program, and it is responsible for reviewing and taking final agency action on CON applications.
Application Submittal and Review and Preliminary Agency Action
The FNP published by the Agency for the April 2003 batching cycle identified a need for zero new hospice programs in SA 8B. That determination was challenged by Hope, but the challenge was subsequently withdrawn.
Hope timely filed a letter of intent and a CON application in the April 2003 batching cycle through which it sought to establish a new hospice program in SA 8B, which is immediately to the south of SA 8C where Hope currently provides hospice services.
Hope's SA 8B application was designated as CON 9695 by the Agency.
In the same batching cycle, Hope also filed an application to establish a new hospice program in SA 8A, which is immediately to the north of SA 8C. That application is the
subject of another pending proceeding at the Division, DOAH Case No. 03-2013, etc.
Hope’s application complied with all of the applicable submittal requirements in the statutes and the Agency’s rules. The application was complete and all applicable filing fees were paid.
The Agency comparatively reviewed Hope’s application with the CON application filed by Heartland, which also sought to establish a new hospice program in SA 8B. The Agency’s review complied with all of the applicable requirements in the statutes and the Agency’s rules.
On August 22, 2003, the Agency issued its State Agency Action Report (SAAR), which summarized its comparative review of the applications filed by Hope and Heartland and recommended denial of both applications.
The Agency published notice of its decision to deny Hope's and Heartland's applications in the September 12, 2003, volume of the Florida Administrative Weekly as required by the statutes and the Agency's rules.
Hope and Heartland timely challenged the denial of their respective applications.
Heartland withdrew its challenge to the denial of its application prior to the final hearing, and it did not participate in the hearing in any way.
The Agency reaffirmed its opposition to Hope’s application at the hearing through the testimony of Jeffrey Gregg, the Bureau Chief of the Agency’s CON program.
Hospice Care, Generally
Hospice care is provided to patients who are at or near the end of their lives. To be eligible for hospice care, the patient must have been diagnosed with a terminal illness from which the patient is expected to die within six months if the disease runs its normal course.
Hospice care is considered palliative care rather than curative care. The purpose of palliative care is to provide comfort to the patient rather than to cure the patient. Curative care is inconsistent with the eligibility requirement for hospice that the patient's illness be terminal.
Hospice care includes a comprehensive range of services provided by physicians, nurses, social workers, chaplains, therapists, and volunteers, which address the psychosocial and spiritual needs of the patient in addition to the physical pain associated with the dying process. Hospice care also includes services provided to the patient’s family, including grief counseling during the dying process and after the patient’s death.
Hospice care is collaboratively provided through care teams, or interdisciplinary teams (IDTs), which are composed of individuals in the various disciplines identified above.
There are four general types or “levels” of hospice care: routine home care (RHC), continuous care, inpatient care, and respite care.
More than 80 percent of all hospice care is RHC.
The types of services provided in RHC vary based upon the patient’s needs, but they typically include health care services provided by a nurse or a home health aide and counseling provided by a social worker or chaplain. RHC is provided in the patient’s home.
Continuous care involves the full-time placement of a nurse or home health aide in the patient’s home to manage a medical crisis that might otherwise require inpatient care.
Inpatient care is for the management of a medical crisis or pain that is out of control. It is provided at a licensed inpatient hospice facility (commonly referred to as a “hospice house”) or at an acute care hospital pursuant to a contract between the hospice and the hospital.
Respite care allows the patient to be temporarily relocated to a nursing home, hospital, or “hospice house” to give the patient's primary caregiver a break.
Hospice care is covered by Medicare, and Medicare is the largest payer source for hospices, both generally and specifically in Hope’s and HON’s hospice programs.
Medicare pays a per diem rate to the hospice that varies based upon the type of care being rendered. For example, the per diem rate for RHC in 2003 was approximately $115.
The hospice receives the per diem rate for each patient, whether or not services are provided to the patient on a given day.
Medicare-certified providers such as Hope and HON are required to comply with the Conditions of Participation in the Medicare regulations, 42 CFR Part 418, in order to receive reimbursement from Medicare for the hospice services that they provide to their patients.
Hope and HON are also required to comply with the state licensure requirements in Part IV of Chapter 400, Florida Statutes, and Florida Administrative Code Rule 58A-2.
The Medicare regulations require hospice providers to directly provide certain “core” services, including nursing, social work, and counseling. Other services, such as physician services, therapies, and medications, may be provided through third parties pursuant to a contract with the hospice.
The Medicare regulations make the hospice responsible for all medical tests, durable medical equipment, biologicals,
and other medically necessary services related to the patient’s terminal illness once the patient elects the Medicare hospice benefit.
Hospices are required to admit hospice-eligible patients without regard to the patient’s ability to pay, and as stated above, Hope and HON each do so.
The Medicare regulations require hospices to have a medical director, who is responsible for the overall medical supervision of the hospice's patients and for setting medical policies and procedures for the hospice. The medical director, or his or her physician designee, is required to participate in the development and maintenance of each hospice patient’s care plan.
The patient’s care plan is required to be developed when the patient is first admitted to hospice, and it is required to be continually updated as warranted by the patient’s condition and needs. Development of the care plan is to be a collaborative process involving the hospice medical director, the IDT, any consulting physicians, the patient, and the patient’s family.
There are four classes of physicians commonly involved in hospice care: referring, attending, consulting, and hospice.
The referring physician is the physician that refers the patient to hospice after determining (in conjunction with
the hospice medical director) that the patient is eligible for hospice. The attending physician is the physician that is primarily responsible for the patient’s care once the patient becomes a hospice patient. The consulting physician is a physician, typically one with some sort of specialty (such as oncology), who is consulted by the attending physician while the patient is a hospice patient. The hospice physician is the medical director of the hospice or other physician employed by the hospice.
The attending physician will either be the referring physician or the hospice physician, depending upon whether the referring physician is comfortable with having primary responsibility for the patient’s care once the patient becomes a hospice patient. A referring physician who chooses not to be the attending physician might become a consulting physician, which is particularly common when the referring physician is a specialist such as an oncologist.
The hospice physician is the attending physician for a majority of the patients at both Hope and HON.
In order for a patient to be admitted to hospice, the hospice medical director must agree with the referring physician's assessment that the patient has a terminal illness that is expected to run its course in less than six months.
Once a patient is admitted to hospice, the only physician who can separately bill Medicare for services rendered to the patient is the attending physician.
For services rendered by the attending physician related to the patient’s terminal illness, the “professional component” (i.e., the patient examination or other hands-on physician care) of the attending physician’s bill is submitted to and reimbursed by Medicare; the “technical component” of the attending physician’s bill (e.g., medical tests, drugs administered) is submitted to and reimbursed by the hospice.
For services unrelated to the patient’s terminal illness, the attending physician’s entire bill is submitted to Medicare for reimbursement. The hospice is not responsible for any portion of the bill.
Other physicians, such as consulting physicians, submit their bills to the hospice rather than to Medicare.
The hospice pays the consulting physician’s bill in the first instance. The professional component of the bill is then submitted by the hospice to Medicare for reimbursement above and beyond the per diem rate paid to the hospice; the technical component of the bill is paid by the hospice without any additional reimbursement from Medicare.
Medicare contracts with a fiscal intermediary who is responsible for reviewing bills from Medicare-certified
providers to determine whether the treatment was actually rendered and whether it was medically necessary and appropriate; however, because the technical component of the consulting physician's bill is paid by the hospice, not Medicare, it is not subject to review by the fiscal intermediary.
Medicare reimburses physician services at a standard rate, which is typically referred to as the “Medicare allowable rate.”
Generally, it is beneficial to the patient for hospice care to be initiated as early as possible after the patient is determined to meet the hospice eligibility criteria so that the patient and his or her family receives as much support as possible during the dying process. As a result, longer lengths of stay in hospice can be viewed as beneficial.
Longer lengths of stay can also be viewed as detrimental to the extent that they are being motivated by the financial interests of the hospice and/or the consulting physicians, who each have the potential to benefit financially from a patient living longer in hospice. The hospice benefits because it receives a per diem payment for each day that the patient is enrolled in its program, and as discussed in Part F(2)(c) below, the consulting physician can benefit if he or she is able to continue to provide services to the patient that he
or she otherwise may not have be able to provide without having to justify the medical appropriateness of the services.
Longer lengths of stay are not necessarily an indicator of hospice quality of care, which depends more upon the services that the patient is receiving from the hospice than the length of time that the patient is enrolled in hospice.
Longer lengths of stay are an indicator of the accessibility of hospice care because they tend to reflect that patients are being referred to, and admitted into hospice earlier in the dying process.
Penetration rates, which are the ratio of hospice admissions in a service area (by age/disease cohort or overall) to the total number of deaths in service area (by age/disease cohort or overall), are a more well-accepted measure of the accessibility of hospice care than are lengths of stay.
The FNP formula used by the Agency to determine need for additional hospice programs in a service area is driven in large part by the penetration rates achieved by the existing hospice(s) in the service area.
Hospices in Southwest Florida and Relevant Demographics of Hospice Service Areas 8B and 8C
Southwest Florida is divided into three hospice service areas, 8A, 8B, and 8C.
SA 8A consists of Charlotte and DeSoto Counties; SA 8B consists of Collier County; and SA 8C consists of Lee, Glades, and Hendry Counties.
Each of those service areas currently has a single hospice provider: Hospice of Southwest Florida, Inc., in SA 8A; HON in SA 8B; and Hope in SA 8C. There are no approved, but not yet licensed hospice programs in any of those service areas.
The 2002 population of SA 8B was approximately 276,000. The population is projected to grow by 21.3 percent over the next five years.
Approximately 24 percent of the SA 8B population is in the 65 and older (“65+”) age cohort, which is higher than the statewide average of 17 percent. The 65+ age cohort is the group most likely to utilize hospice services.
108. | The three-year average death rate in SA 8B is |
0.009131, | which is slightly lower than the statewide average of |
0.010218. | |
109. | The number of deaths in SA 8B is projected to |
increase by 14.1 percent -- from 2,398 to 2,736 -- over the July 2004 through June 2005 planning horizon applicable to this case.
Spanish is the most common second language in SA 8B, and it is particularly prevalent in and around the Immokalee area.
SA 8B and SA 8C are similar in that most of the population is concentrated in the western portions of the service areas along the coast and the eastern portions of the service areas are rural and sparsely populated.
SA 8B and SA 8C are also demographically similar.
For example, both service areas are less densely populated than the state as a whole; both service areas are growing at a faster rate than the state as a whole; the percentage of each service area’s population in the 65+ age cohort is the same and is higher than the statewide average for that age cohort; the median household net worth in both service areas is higher than the statewide average; both service areas had similar mortality rates and a similar array of causes of death for their residents; and both have a single, well-established hospice provider.
Because of the similarities between SA 8B and SA 8C, they should have similar hospice penetration rates. Any material differences between the penetration rates in the service areas can be attributed to differences in the management and operation of HON and Hope.
For calendar year 2002, which is the period reflected in the FNP, the overall penetration rate for SA 8B (44.3 percent) was higher than the overall statewide penetration rate
(43.8 percent), but it was significantly lower than the overall penetration rate for SA 8C (54.7 percent).
The data for calendar year 2003, which was the most current available at the time of the hearing, reflects a significant increase in the overall penetration rate in SA 8B to
53.7 percent. That rate is higher than the statewide penetration rate of 48 percent, and it is only slightly lower than the 55.3 percent penetration rate in SA 8C.
Hope’s Proposed SA 8B Hospice Program
Hope’s proposed SA 8B hospice program is essentially an expansion of its existing SA 8C program’s service area. The policies and procedures that Hope utilizes in its existing program will be implemented in its proposed SA 8B program.
The policies include Hope’s commitment to serving patients and families without regard to caregiver status, homelessness, or HIV/AIDS status, and without regard to their ability to pay.
The procedures include the protocols and algorithms used by Hope’s nurses to help them manage the most common pain symptoms found in hospice patients, including anxiety, fatigue, and depression, as well as Hope's detailed protocols for pediatric hospice patients. The protocols are used by the hospice nurses as a guide in the assessment of the patient; the identification of treatment options; the administration of
medications, when indicated and pre-authorized by the physician; and the facilitation of the nurse’s communications with the physician and pharmacist about the patient’s condition and course of treatment.
Hope intends to establish an office in Naples to serve central and south Collier County. The office will be located in leased space; no new construction is proposed.
Hope intends to serve northern Collier County from its existing Bonita Springs office, which is in Lee County close to the border of Collier County.
Hope intends to serve the Immokalee area from its existing Lehigh Acres office, which is closer to the Immokalee area than is Naples. Additionally, Hope conditioned the approval of its application on its establishment of a “counseling and education center” in Immokalee during the first two years of operation of its proposed SA 8B hospice program.
Hope is not proposing any inpatient hospice beds as part of its SA 8B program. Hope intends to provide inpatient and respite care through contractual arrangements with existing nursing homes and hospitals in Collier County and/or through the use of its inpatient facilities in Lee County.
Hope’s proposed SA 8B hospice program will provide a comprehensive range of hospice services, including physician services, nursing services, home health aide services, social
services, and all other services required by state and federal law.
Hope intends to provide services that are not reimbursed by Medicare or other insurance, such as bereavement services, chaplain services, and massage, music, art, and pet therapies. Hope currently provides those services in its existing hospice program in SA 8C.
Hope expects to receive the vast majority of its referrals to its proposed SA 8B hospice program from physicians’ offices, which is consistent with its experience in SA 8C.
Hope projected in its CON application that a majority of its patients from Service Area 8B will have diagnoses other than cancer, which is consistent with HON's experience in SA 8B.
Hope projected in its application that approximately
86 percent of the admissions at its proposed SA 8B hospice program will be Medicare patients, approximately six percent of the admissions will be Medicaid patients, and approximately two percent of the admissions will be charity patients. The application states that these figures are consistent with Hope’s experience in SA 8C, and the evidence establishes that they are reasonable.
Hope projected in its application that its proposed SA 8B hospice program will have 183, 259, and 304 admissions in its first three years of operation. By the seventh year of
operation, Hope projected that its proposed SA 8B hospice program will have 529 admissions.
Those figures represent 15 percent (year 1), 20 percent (year 2), 22 percent (year 3), and 30 percent (year 7) of the projected hospice admissions in SA 8B. Those market shares are at the high end of the range of the market shares achieved by other recent start-up hospice programs that entered into single-provider markets; however, under the circumstances of this case, the market shares projected by Hope are actually somewhat understated.
In projecting the total number of hospice admissions in SA 8B, Hope assumed that the overall penetration rate in the service area would increase each year based on its presence in the market. The assumption of an increasing penetration rate is reasonable, but attributing that increase to Hope’s presence in the market is not. Indeed, the evidence reflects that penetration rate in SA 8B has been steadily increasing over the past several years to levels consistent with and even higher than the rates projected by Hope in its application.
Hope’s projected admissions translate into ADCs of
32.9 patients (year 1), 51.4 patients (year 2), 61.6 patients (year 3), and 107 patients (year 7). The ADC figures are based upon a 65.7-day average length of stay (ALOS) in year one, which increases to 74-day ALOS in year seven.
The ALOSs and ADCs projected by Hope are consistent with Hope’s experience in SA 8C and are reasonable in light of Hope’s “open access” policies.
The methodology used to calculate the projected admissions and the ADCs is reasonable, and Hope will be able to achieve its projected utilization levels. Indeed, as more fully discussed in Part G below, the projected admissions are actually understated because the penetration rate and market share assumptions made by Hope are too low.
Hope projected in the application that the total project costs for the establishment of its proposed SA 8B hospice program will be $144,208. The largest line-item cost --
$59,818 –- is for “preoperational staffing, recruiting and training.” The projected costs are reasonable.
Hope intends to fund the costs of its proposed SA 8B hospice program with "cash on hand" and operating revenues from its existing SA 8C hospice program.
Hope has sufficient financial resources to fund the costs of its proposed SA 8B hospice program along with its other ongoing capital projects, including its proposed establishment of a hospice program in SA 8A.
Hope projected in its application that it will need
12.88 full-time equivalents (FTEs) to staff its proposed SA 8B hospice program in its first year of operation, and that it will
need an additional 7.12 FTEs (for a total of 20 FTEs) in its second year of operation. It was stipulated that the projected staffing levels are reasonable, and the evidence establishes that Hope will be able to recruit the necessary FTEs at the salaries projected in its application.
In addition to the FTEs projected in the application, Hope will utilize volunteers to “provide both patient and administrative support.” Hope projects that its proposed SA 8B hospice will have approximately one volunteer per patient, or approximately 30 volunteers in the first year of operation and
50 volunteers in the second year of operation.
Hope has been successful in recruiting and retaining volunteers in SA 8C. It will likely be able to recruit and retain sufficient volunteers for its proposed SA 8B hospice program despite the seasonal fluctuations in the availability of volunteers in SA 8B; indeed, SA 8C experiences similar seasonal fluctuations in the availability of volunteers.
The payer mix and revenues projected in Schedule 7A of Hope's application and the expenses projected in Schedule 8A of the application are reasonable.
Hope projected in its application that its proposed SA 8B hospice program would generate a net loss from operations of $18,509 in its first year, and that it would generate a net
profit from operations of $87,027 in its second year. These projections are reasonable.
Hope projected that it will have non-operating revenue of $63,310 and $92,697 in the first and second years of operations. Those amounts include “donations/memorials and bequests” that Hope expects to receive as well as a net of
$10,000 -- $15,000 in revenues and $5,000 in expenses -- in fundraising revenues.
Although Hope’s application states that the fundraising revenue “included in the financial projections is in line with the historical experience at Hope Hospice,” Hope’s audited financial statements reflect that Hope received contributions of $2.47 million and $2.97 million for the fiscal years ending September 30, 2001 and 2002, respectively. Even if
33 percent of those contributions were attributed to fund- raising expenses, which is the ratio used in the application to project the fundraising income, the $10,000 of net fund-raising revenue projected by Hope for its proposed SA 8B program is significantly understated.1
Alleged “Special Circumstances”
Hope identified five “special circumstances” in its CON application which, in its view, support the approval of its proposed SA 8B hospice program. As more fully discussed below,
the preponderance of the evidence does not support Hope’s claims.
Inadequate Service to Persons Under 65
The first special circumstance alleged in Hope’s CON application is that persons under the age of 65 are being underserved by HON.
The justification offered by Hope for this special circumstance was statistical data; there was no testimony from physicians or community witnesses related to this special circumstance.
The primary statistical data relied upon by Hope are the penetration rates in SA 8B for cancer and non-cancer patients under the age of 65 for the calendar-year 2002 time period reflected in the FNP calculations. Because HON is the only hospice provider in SA 8B, the penetration rates for the service area reflect the penetration rates achieved by HON.
The penetration rates for those age/disease cohorts are components of the formula by which the Agency calculates the hospice FNP; the penetration rate for cancer patents under the age of 65 (“U65C patients”) is the P1 factor, and the penetration rate for non-cancer patients under age 65 (“U65NC patients”) is the P3 factor.
HON’s penetration rate for U65C patients for calendar-year 2002 was 57.3 percent, which was lower than the statewide average of 74.8 percent for that age/disease cohort.
HON’s penetration rate for U65NC patients for calendar-year 2002 was 10.7 percent, which was lower than the statewide average of 14.7 percent for that age/disease cohort.
By contrast, the penetration rate achieved by Hope in SA 8C for those age/disease cohorts in calendar-year 2002 was higher than the relevant statewide averages; its penetration rate for U65C patients was 89.3 percent, and its penetration rate for U65NC patients was 16.9 percent.
The data for calendar-year 2003, which was the most current available at the time of the hearing, shows a significant increase in HON’s penetration rates for persons under the age of 65; its penetration rate for U65C patients was
96.21 percent (as compared to the statewide average of 82.6 percent), and its penetration rate for U65NC patients was 16.82 percent (as compared to the statewide average of 15.98 percent).
HON’s penetration rates in those age/disease cohorts is higher than the penetration rates achieved by Hope in SA 8C over the same time period; Hope’s penetration rate in calendar- year 2003 for U65C patients was 87.85 percent, and its penetration rate for U65NC patients was 14.75 percent.
To the extent that the lower penetration rates in SA 8B for patients under the age of 65 in calendar-year 2002 reflected a “gap” in the hospice services provided by HON or an “unmet need” in SA 8B, that gap no longer exists and the unmet need is being met.
Accordingly, the first special circumstance alleged by Hope in its application was not proven.
Denial of Access to Persons on Palliative Chemotherapy and Palliative Radiation
The second special circumstance alleged in Hope’s CON application was that persons who are receiving or may need to receive palliative chemotherapy or palliative radiation (hereafter “palliative chemo/radiation”) are being denied delayed access to hospice by HON.
Palliative Chemo/Radiation, Generally
Palliative chemo/radiation are medical treatments whose primary purpose is to reduce the size of the patient’s malignant tumors, thereby relieving the pressure exerted by those tumors on other organs and reducing the pain associated with that pressure.
Unlike curative chemotherapy and radiation whose purpose is to cure the patient’s cancer and to allow the patient to have a normal life expectancy, the purposes of palliative
chemo/radiation are symptom reduction and improved quality of life during the dying process.
Palliative chemo/radiation is typically administered by oncologists, who are physicians that specialize in the treatment of cancer. The treatments are typically administered in the oncologist’s office.
The toxicity of the chemotherapy and the resulting side-effects (e.g., fatigue, nausea, etc.) have to be weighed against the benefits of the treatment for each patient. Similarly, the burdens of radiation treatment (e.g., interruption of other pain control measures to transport the patient to the radiation facility) have to be weighed against the benefits of the treatment for each patient. In some cases, particularly as the patient’s tumor burden increases, the burdens associated with palliative chemo/radiation will outweigh the benefits.
Palliative chemo/radiation is expensive. The average cost of a treatment is $750, but the cost can be as high as
$2,500 per treatment, and the treatments are typically administered on a weekly basis. The costs of the chemotherapy drugs and the radiation treatments are a larger component of those costs than are the costs of the physician services related to the administration of the drugs/treatments.
An oncologist administering palliative chemo/radiation to a non-hospice Medicare patient submits his or her bills directly to Medicare and those bills are subject to review by the fiscal intermediary as described above.
When palliative chemo/radiation is administered to a hospice Medicare patient by an oncologist who is acting as a consulting physician, the professional component of the palliative chemo/radiation bill is paid by Medicare as a “pass- through” charge submitted by the hospice; the technical component (i.e., the chemotherapy drugs and the radiation treatment itself) is paid by the hospice, not Medicare.
Oncologists make more money on the drugs that are administered as part of the palliative chemo/radiation treatment than they do on the professional services related to the administration of the drugs.
Because the costs of palliative chemo/radiation that are not passed-through to Medicare typically exceed the per diem payment that the hospice receives from Medicare for the patient, the costs of the patient’s palliative chemo/radiation are effectively being subsidized by the per diem payments received by the hospice for other patients. As a result, it is important for hospices that provide large amounts of palliative chemo/radiation to increase their admissions and/or their ALOS in order to remain profitable.
Most hospice patients who are receiving palliative chemo/radiation were receiving that treatment at the time of their admission to hospice. It is far less common that a patient not receiving palliative chemo/radiation at the time of his or her admission to hospice is started on that course of treatment after being admitted to hospice.
At the time the patient is admitted to hospice, the oncologist is in the best position to determine whether the patient is benefiting from palliative chemo/radiation because he or she has an established physician-patient relationship with the patient; however, the hospice medical director is still required to do an independent assessment (typically through a review of the patient’s medical records) of the appropriateness of palliative chemo/radiation as part of the development of the patient’s initial care plan.
Once the patient is a hospice patient, the hospice medical director is responsible for the implementing and monitoring the patient’s care plan and, as a result, the medical director should be the physician making the ultimate decision (with the input of the consulting oncologist, the IDT, the patient, and the patient’s family) as to the continuation or termination of palliative chemo/radiation treatments. To that end, it is important for the medical director to monitor the
effectiveness and appropriateness of the palliative chemo/radiation being administered to the hospice’s patients.
Hospices have a financial incentive not to provide, or not to continue to provide palliative chemo/radiation to their patients because the hospice is not reimbursed for a large part of the high costs associated with those treatments; however, the evidence was not persuasive that the disincentive to providing palliative chemo/radiation is as significant as Hope’s witnesses suggested.2
HON’s Approach to Palliative Chemo/Radiation in Service Area 8B
HON does not categorically deny palliative chemo/radiation to its patients, and it does not refuse to admit or delay the admission of patients who are receiving palliative chemo/radiation.3
HON provides palliative chemo/radiation to its patients where it shown that the treatments are actually benefiting the patient and that the benefits outweigh the burdens on the patient. The consulting oncologist is involved in the benefit-burden analysis, but he or she does not have sole discretion as to whether palliative chemo/radiation will be continued.
Among other things, HON’s medical director uses a fatigue algorithm and the “Palliative Care Practice Guidelines
in Oncology” published by the National Comprehensive Cancer Network in evaluating the benefit and burden to the patient of continuing palliative chemo/radiation. HON’s medical director also uses objective information such as laboratory results and imaging data, which HON requires the consulting oncologist to provide, in the benefit-burden analysis.
HON’s approach is consistent with the Medicare regulations, which vest the ultimate responsibility for the patient’s pain and symptom management in the hospice medical director, not the consulting oncologist. It is also consistent with the “Medical Director Model” published by the American Academy of Hospice and Palliative Medicine.
The amount of palliative chemotherapy provided by HON in 2000, 2001, and 2002, was higher than the “national average,”4 when measured on a cost per patient served basis or cost per patient day basis.
The amount of palliative radiation provided by HON in 2002 was also higher than the “national average” when measured on a cost per patient served basis or cost per patient day basis; it was lower than the “national average” in 2000 and 2001.
HON does not defer to the oncologist’s determination that the patient’s palliative chemo/radiation should be continued once the patient becomes a hospice patient. The
determination as to whether to continue the palliative chemo/radiation is made as part of the development and monitoring of the patient’s care plan.
HON's medical director is ultimately responsible for developing the patient's care plan, which is done with the input and collaboration of the patient, patient’s family, the IDT, and the consulting oncologist.
HON reimburses the consulting oncologist at 100 percent the Medicare-allowable rate for palliative chemo/radiation administered by the oncologist.
Hope’s Approach to Palliative Chemo/Radiation
Hope’s approach to palliative chemo/radiation is much different from HON’s approach, and Hope intends to replicate its existing policies in its proposed SA 8B hospice program.
The differences start in the way that Hope interacts with its referral sources, particularly physician groups such as Florida Cancer Specialists (FCS).
FCS has over 40 medical oncologists with offices in Ft. Myers, Naples, and several other cities in southwest Florida.
Hope generates the vast majority of its admissions from physicians. In 2002, for example, approximately 90 percent of its referrals -- 3,002 out of 3,335 -- were from physicians.
The disproportionate number of physician referrals at Hope is explained, at least in part, by Hope’s “aggressive and assertive” sales and marketing efforts directed to physicians. In that regard, Hope’s “professional relations coordinators” have been trained by a sales and marketing professional to spend most of their time where it is likely to generate the most sales.
Hope employs four professional relations coordinators, who along with a professional relations director and a community relations coordinator, make up Hope’s Professional Relations Department. That Department is Hope’s “sales and marketing arm.”
Hope’s professional relation coordinators most frequently visit physicians’ offices, and primarily oncologists’ offices such as FCS. Indeed, the professional relations coordinator whose region included FCS’s Ft. Myers office testified that she visits FCS, on average, three to five times per week.
The professional relations coordinators’ primary purpose when visiting physicians’ offices is to encourage physicians to make earlier referrals to Hope, thereby increasing the Hope’s ALOS and utilization.
Another significant difference in Hope’s approach to palliative chemo/radiation is the degree of control that the
oncologist continues to have over the patient’s course of treatment after the patient is enrolled in hospice.
Hope's medical director does not routinely monitor or determine the effectiveness and appropriateness of the palliative chemo/radiation administered to its patients; instead, that monitoring is done by the oncologist administering the treatments. As a result, the treatments continue as long as the oncologist determines that they are benefiting the patient.5
Stated another way, for those patients at Hope receiving palliative chemo/radiation, the consulting oncologist effectively controls the patient’s care plan, at least to the extent of the pain management through palliative chemo/radiation, without any significant input from or oversight by Hope’s medical director or the IDT.
Another difference is that Hope uses a third party administrator (TPA) to pay the bills submitted by the consulting oncologists and other physicians.
The TPA performs essentially ministerial duties in processing the bills for payment. It does not do a chart review or any other analysis to determine whether the palliative chemo/radiation or other services billed by the physician were actually delivered or whether those services were medically- appropriate.
The practical effect of using the TPA to pay the bills submitted by the consulting oncologists is that those components of the bills that are not passed through to Medicare
–- e.g., the cost of the chemotherapy drugs or radiation treatments –- are not subjected to any type of utilization review.
The TPA pays the bills submitted by consulting oncologists (and other consulting physicians) at 100 percent of the Medicare allowable rate, typically within 30 days after the bill is submitted.
Hope’s use of the TPA to pay its consulting physicians, in conjunction with the level of control that it gives to its consulting oncologists over the administration of the patient’s palliative chemo/radiation treatments, creates an incentive for oncologists to refer their patients to Hope. The incentive is not financial in the sense that the oncologist will be reimbursed at a higher rate, but rather it is based upon the reimbursement being made without subjecting the treatment or the bills to the same level of review that they would be subject to if the patient was not enrolled in hospice and the oncologist billed Medicare directly.
The end-result of Hope’s policies related to palliative chemo/radiation can be seen in the level of
expenditures made by Hope for those services, both to FCS and in total, as compared to HON and the “national average.”
Hope paid FCS over $1.1 million in 2002, and over
$1.7 million in 2003 for services rendered by FCS physicians to patients at Hope, which primarily consisted of palliative chemo/radiation services. No other physician group received more reimbursements from Hope than did FCS.
In 2002, Hope’s total palliative chemo/radiation expenditures were approximately nine times (i.e., $1.83 million to $207,000) higher than HON’s palliative chemo/radiation expenditures even though Hope only had four times (i.e., 1,344 to 331) as many cancer admissions as did HON.
In 2003, Hope’s palliative chemo/radiation expenditures were more than 12.5 times (i.e., $2.58 million to
$201,500) higher than HON’s palliative chemo/radiation expenditures even though Hope only had 2.3 times (i.e., 1,333 to
571) as many cancer admissions as did HON.
Similarly, on a per-cancer admission basis, Hope’s palliative chemo/radiation expenditures were approximately two times that of HON in 2002 ($1,365 to $625) and approximately 5.5 times that of HON in 2003 ($1,937 to $353).
The disparity between Hope’s and HON’s palliative chemo/radiation expenditures is comparable to the disparity between Hope’s expenditures and the “national average.”
Ultimate Findings Related to Palliative Chemo/Radiation as a “Special Circumstance”
The evidence was not persuasive that hospice patients on or in need of palliative chemo/radiation in SA 8B are being underserved by HON despite the fact that HON provides considerably less palliative chemo/radiation than does Hope in the adjacent SA 8C. If anything, the evidence suggests that those services are being overutlized in SA 8C.
The evidence was also not persuasive that HON has policies that inappropriately deny or unreasonably delay access to hospice for patients on or in need of palliative chemo/radiation, even though HON’s approach to providing those services differs markedly from Hope’s approach. If anything, the evidence suggests that Hope improperly delegates too much authority and control to the consulting oncologist over the management of hospice patients on palliative chemo/radiation.
Accordingly, the second special circumstance alleged by Hope was not proven.
Inadequate Service to African-Americans
The third special circumstance identified in Hope’s CON application is that African-Americans are not being adequately served by HON.
Hope expressly abandoned this alleged special circumstance at the hearing through the testimony of its health planner and the stipulations of its counsel.
Inadequate Intensive Hospice Care
The fourth special circumstance alleged in Hope’s CON application is that intensive hospice care (i.e., inpatient care and continuous care) is not being adequately provided by HON.
Hope expressly abandoned this alleged special circumstance at the hearing through the testimony of its health planner and the stipulations of its counsel.
Inadequate Service to the Immokalee Area
The fifth special circumstance alleged in Hope’s CON application is that the Immokalee area is being underserved by HON.
Immokalee is an unincorporated area in northeastern Collier County composed of zip codes 34142 and 34143. It is approximately 40 miles from Naples.
Immokalee has approximately 20,000 year-round residents, and its population grows to as many as 40,000 residents during the growing season.
Immokalee is a rural, economically-disadvantaged area, and it is generally underserved for health and social services.
In 1993, a charitable organization donated a building in Immokalee to HON. HON remodeled the building to include eight hospice residential beds and office space for the care team members serving patients in the Immokalee area.
HON closed that office in the fall of 1994 because the residential beds were not being sufficiently utilized. HON sold the building (for the cost of the renovations that it made to the building) to an organization that provides social services to residents of the Immokalee area.
HON has continuously provided hospice services to residents of the Immokalee area since 1983 when it began operating in SA 8B, even though it only had physical office space in the Immokalee area for a short time in the mid-1990’s.
HON’s service of the Immokalee area is similar to Hope’s service of Glades and Hendry Counties, which are the rural counties served by Hope in SA 8C. Hope did not have a physical office in those counties until 1996 (Hendry County) and 2001 (Glades County), but according to Hope’s chief executive officer, Hope was still able to adequately serve those counties.
HON continued to serve patients in the Immokalee area after it closed its Immokalee office in the fall of 1994.
HON remained involved in the Immokalee community after it closed its Immokalee office, but prior to April 2002 its involvement was minimal, and did not include the same level
of proactive community education and outreach that it is currently doing.6
HON has recently become more visible in the Immokalee community. For example, HON placed advertisements (in both English and Spanish) in the 2003-04 phone books the serve the Immokalee area; it is now regularly advertises in the local Immokalee newspapers (in both English and Spanish); and it recently joined the Immokalee Chamber of Commerce.
HON has also recently engaged in a number of proactive community education and outreach activities in the Immokalee area. For example, a HON representative regularly participates in the meetings of the Immokalee Interagency Council, which is a collection of social service agencies that meet monthly to coordinate with each other in an effort to ensure that there are no gaps in the social services provided to Immokalee residents.
HON’s renewed involvement in the Immokalee community began in April 2002 when it assigned a “social services coordinator," Kathleen Hill, to the Immokalee area. Ms. Hill was based out of HON’s main office in Naples, but she was in the Immokalee area “a minimum of two to three times a week” meeting with patients and communicating with community organizations regarding the hospice services offered by HON. Ms. Hill continued in that position until April 2003.
HON decided to reestablish an office in the Immokalee area in mid-2002, well before April 2003 when Hope submitted its letter of intent to the Agency for its proposed SA 8B hospice program. That decision was based, in part, on a need to reduce the crowded conditions at HON’s main office by moving staff to satellite offices.
HON’s new Immokalee office opened in August 2003.
The office is staffed by social worker Lillian Cuevas, who is primarily responsible for providing education and information about hospice and HON to community organizations in the Immokalee area. Ms. Cuevas has actively engaged in those education and outreach efforts since she filled Ms. Hill’s position in September 2003.
No direct patient care is provided out of the Immokalee office, but the office is used by the care team members serving patients in the Immokalee area as a place to do charting work.
HON’s current Immokalee office serves essentially the same functions as the “counseling and education center,” which Hope committed in its application to open within two years after the approval of its proposed SA 8B hospice program.
HON penetration rate in the Immokalee area in 2002 was 29.35 percent. That rate is considerably lower than the penetration rate achieved by HON for SA 8B as a whole, which is
not unexpected given the geographic and demographic characteristics of the Immokalee area.
The penetration rate achieved by HON in the Immokalee area in 2002 was lower than the 36.44 percent7 overall penetration rate achieved by Hope in the two rural counties that it serves, but it was higher than the 26.92 percent penetration rate achieved by Hope in Glades County alone.
The difference in the penetration rates achieved by HON and Hope in the rural areas of their respective service areas is not material, and that difference does not in and of itself constitute a special circumstance that would warrant the approval of a new hospice program in SA 8B, particularly since the physical presence that Hope has proposed for Immokalee is essentially the same as that which HON currently has.
In sum, the evidence fails to establish that the Immokalee area is or has been underserved by HON. Moreover, HON’s recent reestablishment of an office in the Immokalee area is expected to help HON increase its penetration rate in the Immokalee area and ensure that that the area continues to be adequately served in the future. Indeed, Hope’s health planner testified that he does not know whether Immokalee continues to be an underserved area in light of HON’s recent reestablishment of an office in the area.
Accordingly, the fifth special circumstance alleged by Hope in its application was not proven.
Impact on HON
As stated above, Hope projected in its application that it will have 183, 259, and 304 admissions at its proposed SA 8B hospice program in its first three years of operation. Those figures also represent the number of “lost admissions” at HON since HON is currently the sole provider of hospice services in SA 8B; however, as discussed below, those figures are materially understated.
First, in projecting the total number of hospice admissions for SA 8B, Hope used penetration rates that are lower than those actually achieved by HON.
The penetration rates used by Hope were based upon the assumption that “gap with the Service Area 8C penetration rates” would be closed by the seventh year of operation of Hope’s proposed SA 8B hospice program; however, the calendar- year 2003 data reflects that the “gap” between the penetration rates in SA 8B and SA 8C has effectively been closed already.
The effect of using the lower penetration rates is that the total number of hospice admissions for SA 8B projected in the application for 2003 and beyond are materially understated and not reliable.
On this issue, the projections made by HON’s health planner regarding the total number of hospice admissions for SA 8B during Hope’s first three years of operation –- i.e., 1,490 (year 1), 1,605 (year 2), and 1,736 (year 3) -- are more reasonable than Hope’s projections in the application.
Second, the projections in the CON application assume that Hope’s proposed SA 8B program will take an equal percentage of the cancer and non-cancer patients that would have otherwise been served by HON.
Specifically, in the first year of operation, Hope projects that it will get 15 percent of SA 8B’s cancer patients and 15 percent of the service area’s non-cancer patients; in the second year of operation, Hope projects that it will get 20 percent of each category’s patients; and in the third year of operation, Hope projects that it will get 22 percent of each category’s patients.
The assumption that Hope will take an equal number of cancer and non-cancer patients from HON each year is not consistent with the evidence regarding Hope’s “open access” philosophy towards palliative chemo/radiation or the testimony of oncologists in SA 8B regarding their intent to refer their patients to Hope rather than HON if Hope’s application is approved.8 Indeed, based upon that evidence and testimony, it is
reasonable to expect that Hope will get a significantly larger percentage of the cancer patients in SA 8B than will HON.
On the issue of the percentage of cancer patients that Hope will take from HON, the projections of HON’s health planner are more reasonable than the projections of Hope’s health planner.9 Specifically, it is reasonable to expect that Hope will get 25 percent, 50 percent, and 75 percent of the cancer patients in SA 8B in its first three years of operation.
The effect of Hope's getting a larger percentage of the service area’s cancer patients is that its total admissions and, hence, HON’s “lost admissions” will more likely be 289, 533, and 787 in its first three years of operation.10
Those admissions translate into projected market shares for Hope of 19.4 percent, 33.2 percent, and 45.3 percent in its first three years of operation, based upon the total number of admissions projected by HON’s health planner for SA 8B over that period. Those market shares are reasonable and attainable, even after taking into account HON’s status as the long-time incumbent hospice provider with considerable community support.
The ultimate effect of the “lost admissions” is that HON’s ADC will be 169 patients (rather than 210 patients) in the first year of operation of Hope’s proposed SA 8B hospice program; 151 patients (rather than 226) in the second year of
Hope’s program; and 134 patients (rather than 245 patients) in the third year of Hope’s program.11
The financial impact on HON of the “lost admissions” is significant, both in terms of the lost patient revenues from the admissions and the lost donations and bequests that HON would have otherwise received from those patients. That financial impact is material, even though HON has a strong balance sheet because the impact will be cumulative and continuing in nature.
The “lost admissions” would require HON to eliminate certain services that it currently provides, including a number of “non-core” services (e.g., massage and pet therapies) that enhance the hospice experience of the patient and his or her family; however, the evidence was not persuasive that HON would have to eliminate as many services as it projected in Exhibit HON-28. Indeed, HON provided those services in the past when its census was at levels similar to those which would result from “lost admissions” to Hope.12
To the extent that Hope’s entry into SA 8B would adversely impact HON’s ability to recruit and retain staff and/or volunteers, that impact is mitigated by HON’s expectation that it would need to cut services and staff as a result of the admissions that it would lose to Hope.
The evidence was not persuasive that Hope’s entry into SA 8B will benefit HON by increasing awareness of hospice services and thereby increasing the overall penetration rate for hospice services in the service area, particularly since the calendar-year 2003 data reflects that the penetration rate in SA 8B is already 53.7 percent, which is the fifth highest in the state and only 2.9 percentage points lower than SA 9C, which has the highest penetration rate in the state at 56.6 percent.
In sum, the approval of Hope’s application will have a material and adverse impact on HON from a financial and programmatic perspective because HON will be transformed from a growing hospice into one with a declining census, which in turn, will limit HON’s ability to provide the same range and quality of services that it currently provides.
Applicable Statutory and Rule Criteria
Section 408.035, Florida Statutes (2004)13 (a) Subsections (1), (2), and (5)
(Need for Proposed Services; Accessibility of Existing Services; and Enhancing Access)
As stated above, there is no numeric need for a new hospice program in SA 8B under the Agency’s rule methodology.
Statistically speaking, HON is adequately meeting the need for hospice services in SA 8B. Its penetration rate has consistently been higher than the statewide average, and the
calendar-year 2003 data, which was the most current available at the time of the hearing, shows that HON's penetration rate is one of the five highest in the state.
Because a hospice’s penetration rate is, a measure of the hospice’s success in making its services accessible to terminally-ill patients in its service area, there is no need for an additional hospice in SA 8B from an access-to-care perspective.
There is also no need for an additional hospice program in SA 8B from a quality of care perspective. HON is accredited by JCAHO and it performs well on the annual state licensure surveys, which provide objective measures the high quality of care at HON.
The anecdotal evidence presented by Hope regarding the inappropriate medication and/or treatment of HON patients and the routine overmedication of HON patients was not persuasive. Most of that testimony was from individuals who had no specialized training or experience in hospice and palliative care or the unique medication issues associated with dying patients in hospice.
The fact that certain medications are discontinued by HON upon the patient’s admission into hospice is not in and of itself an indicator of a quality of care problem at HON. Indeed, it is entirely appropriate for the hospice medical
director to reevaluate each medication that the patient is taking at the time of his or her admission to hospice in order to determine (in conjunction with the patient, patient’s family, and the patient’s other physicians) whether those medications are appropriate since the goals of care in hospice are pain management rather than curative care. The evidence establishes that HON’s medical director does precisely that before discontinuing medications that the patient is taking at the time of his or her admission to hospice.
The evidence was not persuasive that HON requires its patients to execute do-not-resuscitate orders (DNRs) as a condition of admission such that patients who do not have DNRs are being denied or delayed access to hospice care by HON. Instead, the evidence establishes that HON discusses DNRs with its patients at the time of admission and on an ongoing basis, consistent with the guidelines of the American Medical Directors Association, but that it does not require its patients to execute a DNR as a condition of admission.
The evidence was not persuasive that access to hospice care needs to be “enhanced” for any subset of the population in SA 8B, particularly those allegedly underserved groups identified in Hope’s application. See Parts F(1), (2), and (5) above. To the contrary, the evidence establishes that
HON is providing sufficient and appropriate outreach in SA 8B regarding the hospice services that it provides.
Moreover, to the extent that Hope’s proposed SA 8B hospice program would “enhance” access to hospice for patients on palliative chemo/radiation because of Hope’s aggressive sales and marketing efforts designed to get oncologists to refer their patients to Hope earlier, the evidence was not persuasive that such “enhancements” are appropriate under the Medicare regulations or necessarily beneficial to the patient.
In sum, criteria in Section 408.035(1), (2), and (5), Florida Statutes, weigh against the approval of Hope’s application.
Subsection (3) (Applicant’s Quality of Care)
Hope provides quality care at its existing hospice program in SA 8C.14
Hope has several ongoing initiatives through which it continuously evaluates its internal operations and delivery of services to its patients. The purpose of those initiatives is to enhance the quality of care that Hope provides.
It is reasonable to expect that Hope will provide quality care in its proposed SA 8B hospice program because it intends to utilize its current policies and procedures in its proposed program, including its pain and symptom management
protocols which guide the treatment of almost all of Hope’s patients at its existing SA 8C program.
The protocols, which help to ensure that patients receive consistent and quality hospice care, are not unique to Hope. Indeed, HON has developed similar pain and symptom management protocols that guide the treatment of almost all of its patients.
HON provides high quality care at its existing hospice program in SA 8B.15 Indeed, the quality of care that will be provided by Hope in its proposed program is lower than that provided by HON in at least two respects.
First, Hope has fewer bilingual direct-care employees than does HON.
Only five of Hope’s direct-care employees are bilingual. As a result, Hope relies upon volunteer interpreters to enable its direct-care employees to communicate with patients and families for whom English is not the primary language.
By contrast, HON has 25 direct-care employees, including its medical director, who are bilingual in Spanish and English; and it has approximately 15 other direct-care employees who speak French, Creole, Portuguese, Polish, Armenian, Thai/Laotion, sign language, and/or German in addition to English. This allows HON’s direct-care employees communicate directly (rather than though an interpreter) with the patient
and his or her family, and it also fosters sensitivity to the patient’s cultural/ethnic values.
HON has Spanish versions of its brochures, caregiver’s guide, admissions forms, and other materials, which it provides to patients and families whose primary language is Spanish rather than English. Hope also provides some of its documents and forms in Spanish as well as English.
Second, even though Hope’s ALOS exceeds the ALOS at HON and the “national average,” the amount that Hope spends on nursing costs is lower than the “national average” and the amount spent on nursing costs by HON, both on a per patient basis and on a per patient-day basis.
In 2002, for example, Hope’s ALOS was 62.51 days, HON’s ALOS was 49.13 days, and the “national average” was 47.79 days. In that same year, Hope’s nursing expenditures were
$1,158.09 per patient (or $18.53 per patient-day) whereas the “national average” was $1,540.43 per patient (or $33.06 per patient-day) and HON’s nursing expenditures were $2,250.84 per patient (or $45.82 per patient day).
The effect of the higher ALOS and lower expenditures on nursing at Hope is that its patients are staying longer but receiving less, or less-intense direct patient care than HON’s patients.16
There are slight differences in the admissions processes at Hope and HON –- e.g., HON uses designated admissions teams of nurses and social workers for the initial clinical assessment of its patient in order to streamline and eliminate delays in the admission process, whereas the initial clinical assessment of Hope’s patients is done by the nurse and social worker that will be caring for the patient in order to promote continuity of care; however, the evidence was not persuasive that those differences make the admission process and/or the overall quality of care at Hope materially better than that at HON, or vice versa.
In sum, Hope satisfies the criterion in Section 408.035(3), Florida Statutes, because it has a history of providing quality care in its existing SA 8C hospice program and it has the ability to provide quality care in its proposed SA 8B hospice program; however, this criterion does not materially weigh in favor of the approval of Hope’s application because HON is currently providing high quality care in SA 8B.
Subsections (4) and (6) (Availability of Resources and Financial Feasibility)
Hope has adequate personnel and funds to expand its current hospice program into SA 8B as proposed in its CON application.
Hope has adequate financial resources to fund the cost of its proposed SA 8B hospice program and its other ongoing and proposed capital projects, including its proposed SA 8A expansion. As a result, Hope’s proposed SA 8B hospice program is financially feasible in the short-term.
Hope’s proposed SA 8B hospice program is projected to generate a net profit from operations in its second year (see Finding of Fact 141), and as a result, Hope’s proposed SA 8B hospice program is financially feasible in the long-term.
In sum, Hope’s application satisfies the criteria in Section 408.035(4) and (6), Florida Statutes.
Subsection (7)
(Fostering Competition that Promotes Cost-effectiveness)
The establishment of a new hospice in SA 8B will necessarily increase competition for hospice care in the service area because there is currently only one hospice in SA 8B; however, the evidence was not persuasive that such competition would benefit the hospice patients in SA 8B or the community at large.
The evidence was not persuasive that fostering competition is a consideration that should be given significant weight in the hospice context because hospice care does not lend itself to competition in the traditional sense because its “consumers” are terminally-ill patients and their families.
Indeed, Hope’s chief executive officer acknowledged that the free market system should not drive the establishment of hospices, and that not all standard business approaches are appropriate for the hospice industry.
Moreover, the evidence was not persuasive that competition between Hope and HON would promote cost- effectiveness. To the contrary, Hope’s entry into SA 8B would likely result in a dramatic increase the utilization of palliative chemo/radiation services in the service area, which as discussed above, is costly.
Accordingly, the criterion in Section 408.035(7), Florida Statutes, weighs against approval of Hope’s application.
Subsection (8) (Costs and Methods of Construction)
Hope is not proposing any new construction in connection with its proposed SA 8B hospice program, and as a result, the criterion in Section 408.035(8), Florida Statutes, is not applicable.
Subsection (9) (Medicaid and Charity Care)
Hope did not condition the approval of its CON application on the provision of a minimum level of patient days to Medicaid and/or charity patients.
The financial projections in Schedule 7A of Hope’s application assume that six percent of the patient days at its proposed SA 8B hospice program will be attributable to Medicaid patients and that two percent of its patient days will be attributable to charity patients.
The evidence is insufficient to evaluate the significance of the percentages of Medicaid and charity care patient days projected by Hope. For example, the record does not reflect how those percentages compare to the statewide average for hospices and/or HON’s actual experience in SA 8B.
The evidence is also insufficient to evaluate Hope’s past provision of hospice care to Medicaid and charity patients; even though the notes accompanying Schedule 7A state that the proposed payer mix (and, hence, the Medicaid and charity patient-day percentages) is based upon “the experience of the applicant and the proposed service area,” the record does not include Hope’s Medicaid cost reports or other data showing its actual experience in SA 8C.
Nevertheless, it is clear from the evidence that Hope has a history of providing free services for the benefit of the local community that it serves. For example, Hope provides its bereavement services to the entire community, not just hospice patients and families; it offers a bereavement camp known as Rainbow Trails for children who have a death in the family even
if the deceased was not a hospice patient; and it provides crisis counseling to the children in the local schools as needed.
Hope also administers a “VOCA” program that works with the local State Attorney’s office and the Florida Highway Patrol to counsel persons who are victims of crime or who are involved in serious traffic accidents. Approximately 80 percent of the cost of the VOCA program is funded by a grant Hope received from the Attorney General’s Office; the remaining 20 percent is funded by Hope.
The significance of the free services provided by Hope is mitigated by the fact that HON provides similar free services to the community. See Finding of Fact 51. Moreover, the criterion in Section 408.035(9), Florida Statutes, is not entitled to great weight in this proceeding because Hope, like HON and all other hospices, is required by law to serve all hospice-eligible patients who request hospice services regardless of their ability to pay.
Subsection (10) (Designation as a Gold Seal Nursing Home)
Hope is not proposing the addition of any nursing home beds and, as a result, the criterion in Section 408.035(10), Florida Statutes, is not applicable.
(2) Section 408.043(2), Florida Statutes
The statutory criteria in Section 408.043(2), Florida Statutes -- “need for and availability of hospice services in the community” –- encompass essentially the same issues as the criteria in Subsections (1), (2) and (5) of Section 408.035, Florida Statutes, and, the findings related to those subsections equally apply to the evaluation of Hope’s application under Section 408.043(2), Florida Statutes. See Part H(1)(a) above.
(3) Rule Criteria
Florida Administrative Code Rule 59C-1.0355(4)(e)
Florida Administrative Code Rule 59C-1.0355(4)(e)1. provides that preference will be given to an applicant who commits to serve populations with “unmet needs.”
Hope committed in its application to open a "counseling and education center" in Immokalee during the first two years of the operation of its program, and it committed to engage in a “special outreach program to educate the medical and consumer communities in Service Area 8B about the effectiveness of hospice care for patients under the age of 65.”
Those commitments are aimed at two of the population groups in SA 8B that Hope contends are being underserved by HON; however, as discussed in Parts F(1) and (5) above, Hope failed to prove that those population groups are being underserved by HON or that they have "unmet needs."
Florida Administrative Code Rule 59C-1.0355(4)(e)2. provides that preference will be given to an applicant who proposes to provide inpatient care through contractual arrangements with existing health care facilities unless the applicant demonstrates a more cost-effective alternative.
Hope plans to provide inpatient care “through contractual arrangements with existing nursing homes and hospitals or through the use of its three existing and approved facilities in Lee County.” This approach is reasonable, and the record does not reflect whether there is a more cost-effective alternative.
Florida Administrative Code Rule 59C-1.0355(4)(e)3. provides that preference will be given to an applicant who has a commitment to serve patients without primary caregivers at home, the homeless, and patients with AIDS.
Hope plans to serve homeless patients, patients without caregivers at home, and patients with AIDS in its proposed SA 8B program; it has a history of serving such patients in its existing hospice program, as does HON.
The fact that HON has a history of serving such patients reduces the weight given to the preference in Florida Administrative Code Rule 59C-1.0355(4)(e)3., in evaluating Hope’s application.
Florida Administrative Code Rule 59C-1.0355(4)(e)4., which gives preference to an applicant who commits to establish a physical presence in the underserved county or counties of a three-county hospice service area, is inapplicable because there is only one county in SA 8B.
Florida Administrative Code Rule 59C-1.0355(4)(e)5. provides that preference will be given to an applicant who proposes to cover services that are not specifically covered by private insurance, Medicaid, or Medicare.
Hope plans to provide services that are not covered by private insurance, Medicaid, or Medicare, including chaplain services, therapies (e.g., massage, pet, music, art), and bereavement services to families of non-hospice patients; it has a history of providing such unreimbursed services as part of its existing hospice program, as does HON.
The fact that HON has a history of providing similar unreimbursed services reduces the weight given to the preference in Florida Administrative Code Rule 59C-1.0355(4)(e)5. in evaluating Hope’s application.
Florida Administrative Code Rule 59C-1.0355(5)
Florida Administrative Code Rule 59C-1.0355(5) requires the applicant for a new hospice program to include evidence showing that that its proposal is “consistent with the
needs of the community and other criteria contained in the local health council plans.”
The applicable local health council plan includes the following preferences related to hospice care:
Preference shall be given to applications that indicate a willingness to serve patients with HIV/AIDS and the homeless, as well as traditionally underserved populations.
Preference shall be given to applications that propose either new or use of unused inpatient facilities that best provide for the care of patients and families.
Preference shall be given to applications that demonstrate a commitment to provide services that do not impose barriers to care, such as requiring a caregiver or providing intensive palliative care.
Preference shall be given to applications that exceed 80% occupancy level during the period of January through March on an annual basis, and in the event of multiple locations under one license, any individual location applies.
Preference shall be given to applications that meet the minimum volume requirement as specified in the rule within the applicant’s core service area.
The local health plan criteria are not as significant because of the 2004 amendments to the CON law –- Chapter 2004- 383, Laws of Florida -- which effectively eliminated the local health plan as a consideration in CON review.
In any event, except for the third and fifth preferences, the local health plan preferences are either inapplicable or materially similar to the preferences in Florida Administrative Code Rule 59C-1.0355(4)(e) discussed above.
Thus, the findings related to that rule equally apply to the evaluation of Hope’s application under Florida Administrative Code Rule 59C-1.0355(5).
With respect to the third preference, Hope demonstrated that its policies do not discourage the admission patients receiving intensive palliative care, such as palliative chemo/radiation. Indeed, as discussed in Part F(2)(c) above, Hope’s polices effectively encourage the admission of those patients. Thus, to the extent that the local health plan preferences are still relevant, Hope is entitled to the third preference; however, for the reasons stated above in Part F(2)(d), that preference is not given significant weight in relation to the other statutory and rule criteria.
With respect to the fifth preference, the minimum volume requirement in the Agency’s hospice rule is 350 admissions per year, which represents the volume arguably necessary to support a comprehensive range of hospice services. Hope projected in its application that its proposed SA 8B hospice program would achieve that volume by its fourth year of operation and, as discussed in Part G above, it is more likely
to achieve that volume by its second year of operation. Moreover, Hope’s proposed SA 8B program is essentially an expansion of its existing hospice program, which had more than 3,200 admissions in 2003.
With respect to the consistency of Hope’s application with the needs of the community, Hope's proposed SA 8B hospice program is not inconsistent with the needs of patients in the service are under the age of 65, patients in the service area in need of palliative chemo/radiation, and/or patients in the Immokalee area; however, as discussed in Part F above, Hope failed to establish that there was an "unmet need" in those areas that needs to be addressed through the establishment of a new hospice program in SA 8B.
Florida Administrative Code Rule 59C-1.0355(5) also requires the applicant to include letters of support from various types of entities and organizations in the service area endorsing the hospice program being proposed by the applicant.
Hope’s application includes letters of support from physicians, nursing homes, members of the Immokalee community and other individuals, and religious and community organizations. Five of the nine physician letters were from oncologists, three of whom are FCS oncologists.
Hope’s application does not include any letters of support from an acute care hospital in SA 8B, even though the
application states that Hope may provide respite and inpatient care through contractual arrangements with the local hospital.
Florida Administrative Code Rule 59C-1.0355(6)
Florida Administrative Code Rule 59C-1.0355(6), quoted below, requires the applicant to include a detailed description of its proposed hospice program in the CON application.
Among other things, the rule requires the application to include the projected number of admissions for the first two years of operations, the arrangements for providing inpatient care, and proposed community education and fundraising activities.
Hope’s application included all of the information required by Florida Administrative Code Rule 59C-1.0355(6); the description of the project in the application is reasonable and attainable; and as discussed above, Hope will likely exceed the number of admissions projected in its application.
CONCLUSIONS OF LAW
The Division has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Sections 120.569, 120.57(1), and 408.039(5), Florida Statutes.
Hope has the burden to prove by a preponderance of the evidence that its CON application should be approved. See, e.g., Boca Raton Artificial Kidney Center, Inc. v. Dept. of
Health & Rehabilitative Servs., 475 So. 2d 260, 263 (Fla. 1st DCA 1985); Lifepath, Inc. v. Agency for Health Care Admin., Case Nos. 00-3203CON & 00-3205CON, 2003 WL 1336258, at *13 (DOAH Mar.
17, 2003; AHCA July 7, 2003), per curiam aff’d, Case No. 2D03-
3528, 880 So. 2d 1223 (Fla. 2nd DCA 2004) (table); Big Bend Hospice, Inc. v. Agency for Health Care Admin., Case Nos. 02- 0455CON & 02-0880CON, 2002 WL 31501212, at *28 (DOAH Nov. 7,
2002; AHCA Mar. 19, 2003).
In evaluating Hope’s CON application, a balanced consideration of the applicable statutory and rule criteria must be made; the appropriate weight to be given to each criterion is not fixed, but rather varies based upon the facts of the case. See, e.g., Morton F. Plant Hospital Ass’n, Inc. v. Dept. of Health & Rehabilitative Servs., 491 So. 2d 586, 589 (Fla. 1st DCA 1986) (quoting North Ridge General Hospital, Inc. v. NME Hospitals, Inc., 478 So. 2d 1138, 1139 (Fla. 1st DCA 1985)); Lifepath, 2003 WL 1336258, at *13; Big Bend Hospice, 2002 WL 31501212, at *28.
Hope’s application must be evaluated under the statutory criteria in the 2004 version of Section 408.035, Florida Statutes, even though the application was filed, the SAAR was issued, and the Florida Administrative Weekly notice was published prior to July 1, 2004, when the 2004 amendments to the statute became effective. Accord Wellington Regional
Medical Center, Inc. v. Agency for Health Care Admin., Case No. 03-2701CON, etc., 2004 WL 2203513, at **37-39 (DOAH Sept. 29,
2004) (citing Lavernia v. Department of Business and Professional Regulation, 616 So. 2d 53 (Fla. 1st DCA 1993)).
HON has the requisite standing to participate in this proceeding; it currently operates a hospice program in SA 8B, which would be materially and adversely affected if Hope’s CON application is approved. See § 408.039(5)(c), Fla. Stat.
Florida Administrative Code Rule 59C-1.0355, which is the Agency's CON rule for hospices, provides in pertinent part:
General Provisions.
* * *
(b) Conformance with Statutory Review Criteria. A certificate of need for the establishment of a new hospice program, construction of a freestanding inpatient hospice facility, or change in licensed bed capacity of a freestanding inpatient hospice facility, shall not be approved unless the applicant meets the applicable review criteria in sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless other criteria in this rule and in sections 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need.
Criteria for Determination of Need for a New Hospice Program.
Numeric Need for a New Hospice Program. Numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in a service area is calculated as follows:
[FNP formula omitted]
* * *
Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following:
That a specific terminally ill population is not being served.
That a county or counties within the service area of a licensed hospice program are not being served.
That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons.
Preferences for a New Hospice Program. The agency shall give preference to an applicant meeting one or more of the criteria specified in subparagraphs 1. through 5.:
Preference shall be given to an applicant who has a commitment to serve populations with unmet needs.
Preference shall be given to an applicant who proposes to provide the
inpatient care component of the hospice program through contractual arrangements with existing health care facilities, unless the applicant demonstrates a more cost- efficient alternative.
Preference shall be given to an applicant who has a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS.
In the case of proposals for a hospice service area comprised of three or more counties, preference shall be given to an applicant who has a commitment to establish a physical presence in an underserved county or counties.
Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare.
Consistency with Plans. An applicant for a new hospice program shall provide evidence in the application that the proposal is consistent with the needs of the community and other criteria contained in local health council plans and the State Health Plan. The application for a new hospice program shall include letters from health organizations, social services organizations, and other entities within the proposed service area that endorse the applicant’s development of a hospice program.
Required Program Description. An applicant for a new hospice program shall provide a detailed program description in its certificate of need application, including:
Proposed staffing, including use of volunteers.
Expected sources of patient referrals.
Projected number of admissions, by payer type, including Medicare, Medicaid, private insurance, self-pay, and indigent care patients for the first 2 years of operation.
Projected number of admissions, by type of terminal illness, for the first 2 years of operation.
Projected number of admissions by two age groups, under 65 and 65 or older, for the first 2 years of operation.
Identification of the services that will be provided directly by hospice staff and volunteers and those that will be provided through contractual arrangements.
Proposed arrangements for providing inpatient care (e.g., construction of a freestanding inpatient hospice facility; contractual arrangements for dedicated or renovated space in hospitals or nursing homes).
Proposed number of inpatient beds that will be located in a freestanding inpatient hospice facility, in hospitals, and in nursing homes.
Circumstances under which a patient would be admitted to an inpatient bed.
Provisions for serving persons without primary caregivers at home.
Arrangements for the provision of bereavement services.
Proposed community education activities concerning hospice programs.
Fundraising activities.
* * *
(Emphasis supplied).
The “special circumstances” portion of the rule –- i.e., paragraph (4)(d) –- has been construed as follows:
[T]he special circumstances rule requires applicants to demonstrate at least one of the three listed reasons for such circumstances. However, it does not prohibit applicants from showing that other "not normal circumstances"[17] exists in the [service area].
[T]he special circumstances rule does not require an applicant to show that the needs of a specific population or a county are "unserved" or totally unmet. To the contrary, an applicant is entitled to show that an underserved population or that an underserved county warrant consideration as under the rule.
See Big Bend Hospice, 2002 WL 31501212, at *29. Accord
Hernando-Pasco Hospice, Inc. v. Agency for Health Care Admin., Case No. 01-4460RX, at 6-7 (DOAH Mar. 17, 2003), per curiam aff’d, Case No. 2D03-1715, 880 So. 2d 1223 (Fla. 2nd DCA 2004)
(table).
The lack of numeric need for a new hospice program in SA 8B is not outweighed by any “special circumstances” or “not normal circumstances.” Hope did not present any “not normal circumstances” in support of its application and, as discussed in Part F of the Findings of Fact, the “special circumstances” alleged in the application were not proven.18
The lack of numeric need is not outweighed by the applicable statutory and rule criteria. Indeed, on balance, the applicable criteria weigh against the approval of Hope’s application. See Findings of Fact, Part H.
Because Hope failed to prove that the lack of numeric need is outweighed by any “special circumstances” or a balanced consideration of the other statutory and rule criteria, its application must be denied. See Fla. Admin. Code R. 59C- 1.0355(3)(b).
Based upon the foregoing findings of fact and conclusions of law, it is
RECOMMENDED that the Agency issue a final order denying Hope’s application, CON 9695, to establish a new hospice program in SA 8B.
DONE AND ENTERED this 24th day of January, 2005, in Tallahassee, Leon County, Florida.
S
T. KENT WETHERELL, II Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2005.
ENDNOTES
1/ In making this finding, the undersigned did not overlook the note to Schedule 8A, which states that the non-operating revenues projected in the application were “conservatively adjusted downward.” Such an adjustment is not inherently unreasonable because it tends to ensure that the bottom-line, net profit for the project is not overstated; however, such an adjustment also has the effect of understating the impact on HON against whom Hope will be competing for the limited fund-raising dollars is SA 8B.
2/ For example, Hope’s palliative chemo/radiation expenditures have amounted to only $7 to $10 per patient over the past three years, which is more than offset by the increases in Hope’s ALOS (and the per diem associated with each additional day that the patient is enrolled at Hope) over that period. See also Tr.
703-05 (testimony of Jill Lampley, Hope’s chief financial officer, that in her 12 years at Hope there has never been an instance where the per diem patient revenues attributable to Hope’s total patient population were insufficient to cover the costs of palliative chemo/radiation provided to a subset of that population).
3/ In making this finding, the undersigned did not overlook the contrary testimony of the oncologists presented by Hope; however, that testimony was less persuasive than the testimony of HON’s medical director on the issue of HON’s policies and practices related to the admission of patients on palliative chemo/radiation. Indeed, the general theme of the oncologists’ testimony was that they delayed referral of their patients to HON because of their perception or “sense” that HON would not accept the patient, rather than HON actually refusing or delaying the admission of patients referred by the oncologist.
See, e.g., Tr. 982-86 (Dr. Heldreth); Tr. 1131-32 (Dr. Walker); P19.15, at 28-29 (Dr. Morris); Exhibit P19.18, at 10-12 (Dr.
Rubenstein). The only oncologist who credibly and persuasively testified about patients on palliative chemo/radiation who he referred to HON and who were not admitted was Dr. Heldreth, and he did not have first-hand knowledge whether the patient was not admitted for some legitimate reason unrelated to the palliative chemo/radiation; he characterized HON’s failure to admit his
patients on palliative chemo/radiation treatment and/or the discontinuance of palliative chemo/radiation after the patient was admitted as a “professional disagreement” between himself and the hospice medical director about the appropriate course of the patient’s treatment. (Tr. 939-44), and he testified that he is “starting to feel more comfortable” referring patients on palliative chemo/radiation to HON because of what he perceived as a recent change in HON’s policy related to the admission of those patients. Tr. 942. Accord Tr. 1125 (Dr. Walker’s testimony about a change in HON’s “acceptance pattern” for patients on palliative chemo/radiation and other supportive care).
4/ The “national average” calculated in Exhibits HON-92 through HON-95 and referred to herein only included hospices with more than 350 admissions per year. In making findings based upon those exhibits, the undersigned did not overlook the testimony of Hope’s witnesses who criticized the comparison of data from hospices with as few as 350 admissions to Hope and HON, which had 1,062 and 3,099 admissions, respectively, in 2002; however, those criticisms were not overly persuasive since Hope did not identify what admission-threshold would be an appropriate peer group, and it did not offer any credible evidence showing the extent to which the “national average” calculated by HON is skewed by the inclusion of smaller hospices, if at all.
5/ In making this finding, the undersigned did not overlook the hearing testimony of Hope’s vice president of clinical services, Gwen Feather (Tr. 295-98), and Hope's former medical director, Dr. Diane Smith (Tr. 2300-04), regarding the coordination between Hope’s physicians and staff and the consulting oncologists who administer the palliative chemo/radiation; however, the weight of the evidence was to the contrary. See, e.g., Exhibit HON-114, at 12-16 (deposition testimony of Dr.
Smith); Tr. 814-16 (FCS oncologist Dr. Thomas Teufel); Exhibit HON-45, at 18-19 (former Hope employee Carol Walter); Tr. 945-46 (FCS oncologist and former Hope medical director Dr. Douglas Heldreth).
6/ In making this finding, the undersigned did not overlook the calendars of events introduced by HON (e.g., Exhibits HON-72 through HON-74), which included references to community events in the Immokalee area between 1996 and 2001 and identified a HON employee responsible for the event, nor did the undersigned overlook the deposition testimony presented by HON (e.g., Exhibits HON-53 through HON-59) relating HON’s involvement in the Immokalee community and its service to residents of the
Immokalee area. The calendars of events and the related hearing testimony did not persuade the undersigned that the identified HON employee (or any other HON employee) actually attended those events. The deposition testimony presented by HON primarily relates to HON’s involvement in Immokalee community activities after 2001 and, as to earlier time periods, the testimony presented by HON was less persuasive than the testimony presented by Hope (e.g., Exhibits P19.2 and P19.14; Tr. 746, et seq.) regarding HON’s minimal community involvement and outreach activities in the Immokalee area between the mid-1990’s when HON closed its original office and 2002-03 when it renewed its proactive community education and outreach efforts.
7/ This figure was calculated as follows: 28 hospice admissions from Glades County (from Exhibit HON-105, at 1) plus
109 hospice admissions from Hendry County (from Exhibit P22, at
8) divided by the total resident deaths in those counties (from Exhibit P22, at 8). The undersigned found the Glades County admissions data from Exhibit HON-105 to be more credible than the comparable data from Exhibit P22.
8/ See, e.g., Tr. 983 (testimony of Dr. Heldreth, who is the senior partner in a large oncology group in Naples, stating that he would immediately refer all of his patients to Hope rather than HON as soon as Hope opened in SA 8B). See also Part F(2)(c), above (discussing Hope’s approach to palliative chemo/radiation and its aggressive sales and marketing efforts that are designed to increase referrals from oncologists).
9/ The undersigned did not find reasonable the projections of HON’s health planner regarding the increasing percentage of non- cancer patients that Hope would take from HON. On that issue, the undersigned finds the projections of Hope’s health planner to be more reasonable.
10/ These figures are calculated by applying the percentage of cancer patients projected for Hope in Exhibit HON-107 (page 1) and the percentage of non-cancer patients projected for Hope in Exhibit P4 (page 75) to the number of projected hospice admissions in those categories from Exhibit HON-107 (page 1).
11/ These figures were calculated by deducting the ADC attributable to the “lost admissions” identified in the preceeding paragraph from the ADC attributable to the total admissions for SA 8B indicated in Exhibit HON-107. An ALOS of
51.5 was used to convert the number of admissions into an ADC, consistent with the assumptions in Exhibit HON-107.
12/ In making this finding, the undersigned did not overlook the distinction drawn by HON witness Karen Rollins that HON provided those services in the past because it was in a growth mode and that it would not provide those services at similar census levels in the future in a non-growth mode. That testimony was not persuasive when viewed against the other testimony and evidence from HON witnesses regarding HON’s longstanding commitment to the community.
13/ All statutory references in this Recommended Order are to the 2004 version of the Florida Statutes. See Conclusion of Law 318.
14/ In making this finding, the undersigned did not overlook HON’s argument that Hope’s quality of care is deficient as a result of Hope’s approach to palliative chemo/radiation. See, e.g., HON’s PRO, at 69. Notwithstanding the problems with Hope’s approach to palliative chemo/radiation discussed in Parts F(2)(c)-(d) above, the evidence was not persuasive that the overall quality of care provided at Hope was deficient because of Hope’s approach to palliative chemo/radiation, which is provided to a relatively small subset of its patients, nor was the evidence persuasive that any of the patients at Hope who received palliative chemo/radiation had adverse outcomes.
15/ In making this finding, the undersigned did not overlook the anecdotal testimony offered by various Hope witnesses regarding specific patients’ families who were not happy with the care provided by HON and/or general concerns with the level of care provided by HON. That testimony was generally less persuasive than the testimony presented by HON regarding its reputation in the community (see, e.g., Exhibits HON-61, HON-62, and HON-64), and in any event, the significance of the anecdotal testimony was mitigated by the acknowledgements of other Hope witnesses that there have also been breakdowns in Hope’s procedures that have led to less than ideal outcomes (see, e.g., Tr. 788) and that it is unreasonable to expect any organization to have no negative feedback or criticisms from patients or others (see, e.g., Exhibit HON-112, at 77-78). The undersigned has also not overlooked Hope’s argument that the quality of care at HON is somehow deficient because its ALOS and its expenditures on palliative chemo/radiation are significantly lower than Hope’s. See Findings of Fact 97-99, 201-202, 267- 269.
16/ In making this finding, the undersigned did not overlook Hope’s contention that its lower nursing costs were due, at least in part, to economies of scale and efficiencies gained through its large census and/or by its nurses serving more patients each day than do HON’s nurses; however, the undersigned did not find that contention persuasive. Nor did the undersigned overlook Hope’s contention that, as a general rule, patients (and their families) benefit from longer lengths of stay in hospice because they are able to receive palliative care and emotional support for a longer period of time; however, the preponderance of the evidence showed that the primary beneficiary of longer lengths of stay is the hospice. See Findings of Fact 97-99.
17/ “Not normal circumstances” is a phrase of art in the CON context. In order to establish “not normal circumstances,” the applicant
must demonstrate and there must be some finding of fact that, without the requested [service], the existing facilities are (or will be) unavailable or inaccessible, or the quality of care is (or will be) suffering from overutilization, or other evidence of that nature.
Humana, Inc. v. Dept. of Health & Rehabilitative Servs., 492 So. 2d 388, 392 (Fla. 4th DCA 1986). See also Humana, Inc. v. Dept. of Health & Rehabilitative Servs., 469 So. 2d 889, 891 (Fla. 1st DCA 1985). Although there is not a list of enumerated “not normal circumstances,” they typically involve “issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns.” See West Florida Regional Medical Center, Inc. v.
Agency for Health Care Admin., Case No. 93-4886CON, 1994 WL 1027902, at *14 (DOAH Nov. 18, 1994; AHCA Apr. 18, 1995).
18/ In light of this conclusion, it is not necessary to address HON’s argument that the U65C and U65NC patients are not discrete population groups that can be considered under the “special circumstances” rule as being underserved (or not) because those population groups are included as part of the FNP calculation.
See HON’s PRO, at 15. But see Big Bend Hospice, supra (concluding that the unmet needs of elderly non-cancer patients, which is a population group included in the FNP calculation, constituted a special circumstance justifying the approval of the hospice program at issue in that case).
COPIES FURNISHED:
Richard Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Alan Levine, Secretary
Agency for Health Care Administration Fort Knox Building, Suite 3116
2727 Mahan Drive
Tallahassee, Florida 32308
Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308
J. Robert Griffin, Esquire
J. Robert Griffin, P.A.
1342 Timberlane Road, Suite 102-A Tallahassee, Florida 32312-1762
Robert D. Newell, Jr., Esquire Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
Kenneth W. Gieseking, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Station No. 3 Tallahassee, Florida 32308
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the entity that will issue the Final Order in this matter.
| Issue Date | Document | Summary |
|---|---|---|
| May 05, 2005 | Agency Final Order | |
| Jan. 24, 2005 | Recommended Order | The Agency should deny the Certificate of Need application for a new hospice in Service Area 8B, as the existing provider is adequately serving the area. Petitioner did not prove any unmet need or other "special circumstances" as required by agency rule. |
